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Monday, March 19, 2018

MARKET OVERVIEW
- Expect a rocky week ahead of a FOMC meeting and a widely expected rate hike, with investors focusing on the Fed's tightening trajectory as well as global trade war fears amid positive economic data.
- Technically, the STI is trading with a triangle formation with near-term support at 3,479 and topside resistance at 3,550.

POSITIVE NEWS
*Bukit Sembawang
- Acquired 118-unit Katong Park Towers through collective sale tender for $405m or $1,280 psf ppr, 20% above the reserve price, beating nine other bidders.
- The 99-year leasehold property has a site area of 140,758 sf with plot ratio of 2.1 and is located in the vicinity of the upcoming Katong Park MRT station (completion in 2023).
- Assuming an estimated ASP of $2,200 psf, the project will yield a development surplus of $0.23/share.
- Trading at underrated 41% discount to RNAV of $10.35.
- MKE has a Buy with TP of $8.25.

*StarHub
- Partnering with local solar energy provider, Sunseap to venture into the electricity sector.
- Plans to sell electricity in Apr at the soft launch of the Open Electricity Market in Jurong.
- There will be two clean energy subscription plans offerred by both companies: Green Life and Green Save.
- Customers of Green Life will get 100% of electricity produced by Sunseap's solar systems and be charged the regulated electricity tariff, now at 21.56¢/kWh.
- Green Save customers will get 5% clean energy and entitled to 20% discount off the regulated tariff.
- All households in the Jurong area will be able to buy electricity from any of the 14 retailers from next month. This option to shop around for electricity suppliers will be extended to the rest of Singapore in 2H18.
- MKE has a Sell with TP of $2.17.

*Jackspeed
- Awarded a two-year renewable contract by a European OEM supplier to car manufacturers.
- Under the contract, the group will supply more than 12,000 upholstery leather kits per annum, significantly large compared to its current annual production of 18,000.
- Awarded a separate two-year contract with an OEM automotive manufacturer in Malaysia to supply 2,300 vehicle upholstery kits per annum for a commercial vehicle model.
- Following the acquisition of new premises, its current production capacity of 26,000 upholstery kits will be increased to 32,000 by 3Q18.

NEGATIVE NEWS
*Noble
- Declared that it will not make interest and principal amounts payable on its 8.75% USD senior notes due 2022 and 3.625% USD senior notes due 20 Mar 2018 to "preserve assets" during its proposed restructuring.
- This event of default could trigger payouts on credit default swaps tied to the group and activate cross-default clauses on its other debts.
- It would also allow some customers/trading partners to exercise clauses and walk away from its trading contracts.
- Valuations are no longer meaningful given its eroding balance sheet.

*Hatten Land
- Terminated proposed acquisition of Rico Development (RD) and Rico Ventures (RV) for a total of RM90.8m.
- The deal was cancelled as the parties could not come to an agreement on a revised issue price given that that group's share price has weakened over time.

NEUTRAL NEWS
*Keppel Corp
- Acquired the remaining 10%-stake in Saigon Sports City (held through Jencity) in Vietnam for US$11.4m from Jenclub.
- Saigon Sports City is a 64ha township in Ho Chi Minh City with total development cost projected to be more than US$500m.
- The first phase of the development will feature commercial space of 90,000 sqm of gfa and 1,220 homes, of which, 620 units will be launched in 2H18.
- Trades at 14.3x forward P/E.

*ComfortDelGro
- Combined its 60%-owned ComfortDelgGro Savico Taxi and 70%-owned Vietnam Taxi operations as part of efforts to rationalise its taxi business in Ho Chi Minh City.
- Also acquiring the remaining 10%-stake in Chongqing ComfortDelGro Driver Training from by-Hour Driver Training Centre of Chongqing for Rmb5m ($1m).
- 80%-owned Beijing Tian Long Da Tian Vehicle Inspection has ceased operations temporarily following government redevelopment of its land. It is actively seeking an alternative site for the resumption of operations.
- Trades at 14.7x forward P/E and offers a dividend yield of 5.2%
- MKE has a Buy with TP of $2.35

*HL Global Enterprises
- Proposed to convert all its existing non-redeemable convertible cumulative preference shares (NCCPS) to ordinary shares at a conversion ratio of 10 to 1.
- This is subject to the approval of shareholders and NCCPS holders.

*Infinio Group/Oxley
- Acquiring 80% stake in Oxley Batam for $10.4m and assuming the inter-company loan of $10.4m from Oxley Holdings.
- Oxley Batam is engaged in construction, development and operation of properties in Batam, Indonesia and recorded a net loss of $0.009m in FY6/17 with negative NAV of $0.06m.
- This is in line with the group's strategic plan and on-going efforts to pursue and diversify into property business.

CORPORATE RESULTS
*Datapulse Tech
- Turned around to 2QFY18 net profit of $38.1m, boosted by a property disposal gain of $44.6m.
- Revenue jumped 58% to $4.5m from a one-off special project worth $1.3m, as well as new contribution from recently-acquired Wayco Manufacturing (Dec '17).
- Improvement to bottom line was pared by higher opex (+165.5%), arising from a spike in staff costs (+307.6%) and increased raw material expenses (+202.9%).
- Trades at a trailing 2.2x P/E.

*Chip Eng Seng
- Proposed to dispose a commercial site at 150 Queen Street, Melbourne, for A$55m.
- The property was purchased in Sep '11 for redevelopment into a 71-storey residential apartment skyscraper dubbed as Tower Melbourne.
- However, legal action brought about by the adjoining site owner in 2013 had halted the project indefinitely.
- The sale is expected to complete by 3 Jul '18, and may contribute positively to the NTA and earnings of the group for FY18.
- Trades at 0.75x P/B.

*Memtech Intl
- Established a new subsidiary, Kunshan Taitech Automation, that will undertake research and manufacturing of automation equipment, robots, electrical and other intelligent or hi-tech equipment and parts.
- Trades at 15.1x forward P/E.

*Spackman Entertainment
- Distribution rights to its Korean fantasy melodrama film, Be With You, has been sold to 17 countries worldwide.
- The film is scheduled to open in Taiwan, Vietnam and Singapore on 30 Mar, 6 Apr and 19 Apr, respectively.
- Trades at 7x forward P/E.

*Lorenzo Intl
- Disposing two properties located in Kuala Lumpur, Malaysia for RM4.6m ($1.6m) to reap a disposal gain of RM2.6m.
- Intends to use proceeds for general working capital purposes.
- Trades at 3.26x P/B.

NEUTRAL NEWS
*OCBC
- Extended the long stop date of the 33.33% stake sale in Hong Kong Life Insurance to 30 Sep '18.
- To recap, the HK$2.37b ($425.9m) deal is priced at 2.98x P/B, and subject to regulatory approvals.
- Trades at 1.44x P/B.

*Yanlord Land
- Acquired property development company, Hainan Jinzhonghong Industrial Development, for Rmb10m, or 3.33x P/B.
- The group will be injecting an additional Rmb22m into the newly-acquired entity.
- Trades at 0.72x P/B.

*DeClout
- 50.01% owned vCargo Cloud (VCC) will be implementing a pilot National Single Window e-trade project in Djibouti, Africa.
- The pilot project will showcase VCC's capabilities to execute seamless cross-border trade in developing countries through its CamelONE e-trade platform, which will significantly reduce cross-border risks and costs incurred by shippers and companies.
- Djibouti has been recognised as a key location in China's Belt and Road Initiative, with the country importing more than US$1.98b worth of goods from China.
- With the addition of Djibouti, CamelONE is currently connected to 13 custom nodes globally, including Eastern Africa - Burundi, Kenya, Rwanda, Tanzania and Uganda.
- In 2017, CamelONE platform facilitated more than US$117b gross merchandise value across 12 countries.
- Trades at 0.63x P/B.

Thursday, March 15, 2018

MARKET OVERVIEW
- Rising worries on heightening trade tensions could result in a jump in volatility for the SG market, as investors steer clear of potential downside risks arising from increased protectionism.
- Technically, the STI sees its next objective at 3,575 with near-term support at 3,470.

ECONOMIC WATCH
*Economy
- Private-sector economists have raised Singapore's 2018 GDP growth forecast to 3.2%, against an earlier estimate of 3% made in Dec '17, and falls within the MTI's range between 1.5% and 3.5%.
- GDP growth is anticipated to moderate to 2.8% in 2019.

*Khong Guan
- 1HFY18 net profit soared 733.68% to $0.8m albeit from a low base of $95,000.
- Revenue inched up 0.3% to $28.8m as declines in contributions from its Sabah operations (-1.6%), others (-18.3%) and investment trading (-52.3%) was mitigated by strength in its Penang operations (+15%).
- Bottom line was further boosted by a positive change to short-term investments to $0.6m (1HFY17: -$0.8m).
- Trades at 24.6x trailing P/E.

POSITIVE NEWS
*Keppel DC REIT
- Acquiring the remaining 999-year leasehold interest in Keppel DC Dublin 1 located at Dublin 24 for 30m ($48.1m).
- The longer tenure will allow the REIT to be more agile in its investment strategy and provide longer term certainty to its clients.
- Post-acquisition, the REIT will own leasehold interest in the data centre until end 2998, up from Apr 2041 currently.
- Transaction is slated to take place within 1H20.
- Offers an indicative yield of 5% and trades at 1.45x P/B.

*Spackman Entertainment
- Korean fantasy melodrama film, Be With You, grossed US$805.5k on the first day of its release, capturing 34.6% market share of Korea's box office revenue.
- The group is one of the major investors in the film and is co-presented by associate company Spackman Media Group.
- Potential income is expected from a multitude of direct and indirect channels including investment return, artists fees, and co-presenting fees.
- Trades at 6.9x forward P/E.

*Keong Hong
- Awarded a contract to erect a a building for the National Skin Centre.
- Also, group will reconstruct an existing 5-storey building for the National Healthcare Group Offices.
- No financial details were provided.
- Last traded at 2.2x trailing P/E.

NEGATIVE NEWS
*AA Group Holdings
- Charged with an offence under the Workplace Safety and Health Act for failure to ensure safety of workers from contractor Poh Huat Heng Corp. in carrying out painting works at a factory at 60 Benoi Road.
- Potential fine is expected to be $0.13m.
- Next court hearing is scheduled on 10 May '18.

*China Kangda Food Company
- Guided for FY17 loss due to an increase of mortality rate of chickens resulting from bad weather and higher admin cost arising from increased professional fees and employees' cost.

Wednesday, March 14, 2018

MARKET OVERVIEW
- Some profit-taking in risk assets is likely in the near-term due to political concerns in the US, while investors keep their eyes peeled on retail sales and industrial production data coming out from China this morning.
- Technically, the STI sees its next objective at 3,575 with near-term support at 3,470.

POSITIVE NEWS
*Weiye
- Proposed conditional delisting from SGX at $0.65/share (HK$3.88/share) by Chairman and controlling shareholder, Mr. Zhang Wei.
- Shareholders who do not accept the exit offer will be able to continue trading their shares on HK Exchange.
- The delisting is due to the limited trading liquidity on SGX, as well as HK Exchange being geographically more aligned with its business operations.
- The mixed property developer trades at 0.36x P/B.

NEGATIVE NEWS
*Alliance Mineral
- The board has terminated the services of CEO Tjandra Adi Pramoko and his wife Simone Suen Sze Man, citing a loss of confidence in both persons.
- Both persons are its second largest shareholder and owns a 12.1% stake as at Jan'18.
- Separately, group updated that it has commenced production at Bald Hill Lithium and Tantalum Mine in Western Australia.

*ICP
- Recently-installed financial controller, Lim Sze Chern, has resigned after four months on the job, to pursue personal interests.
- Last traded at 0.64x P/B.

NEUTRAL NEWS
*SGX
- Proposed to combine the contract classes for exchange-traded derivatives and OTC commodities into a single contract class, as well as to refine the methodology for members' clearing fund contributions.
- Maybank KE last had a Buy and TP of $8.73.

*CapitaLand
- Divested an undeveloped land parcel in Ahmedabad, India, at book value of Rp528.5m, as part of the group's strategy to enhance capital productivity.
- Maybank KE has a Buy with TP of $4.10.

*Perennial Real Estate
- To acquire the remaining 50% stake in mixed development, Capitol Singapore, for $528m.
- The deal is expected to be completed by 8 May.
- Last traded at 0.53x P/B.

*Acromec
- Diversifying into the renewable energy sector via a 80:20 JV with Malaysia's Green Energy Resources.
- The Malaysian JVCo will look for opportunities to work on projects related to electricity generation on a build-own-operate basis.
- Group also expanded its trading operations into Indonesia, where it will provide engineering products and solutions to the country.

Tuesday, March 13, 2018

MARKET OVERVIEW
- Tech-related manufacturers could provide the SG market with a boost, while investors remain cautious on global trade tensions.
- Technically, the STI sees its next objective at 3,575 with near-term support at 3,470.

*LY Corp
- FY17 net profit rose 17.8% to RM51.2m, supported by lower effective tax rate of 20.5% (FY16: 22.9%).
- Revenue grew 22% to RM350.6m on higher sales volume (+17.4% to 6,620 containers) arising from increased demand from the US, as well as increased ASP of RM53,000 (+3.9%) per container of products sold.
- However, gross margin narrowed 1ppt to 25% on higher cost of sales (+23.7% to RM262.9m).
- Declared first and final DPS of 0.78¢ (FY16:nil).
- NAV/share at RM4.35.

POSITIVE NEWS
*mm2 Asia
- 51% owned Vividthree Productions is partnering KRX-listed New Entertainment World to develop a virtual reality tour show based on the 2016 Korean blockbuster, Train to Busan.
- No further details were disclosed.
- Trades at 21.7x forward P/E.

*Tan Chong Intl
- Expected to report a substantial increase in FY17 net profit mainly due to more favourable business conditions.
- Slated to release results by end-Mar.

NEGATIVE NEWS
*Midas
- To search for more potential undisclosed corporations within the group as part of its action plan to address irregularities.
- Other measures include the appointment of a Chinese law firm as its external Chinese legal counsel and the submission of information to external auditors.
- There will also be a change in legal representative for six of its subsidiaries.
- Counter remains suspended.

*Anwell
- Singapore High Court has granted the discharge of the judicial management order and winding up of the group.
- The liquidators will prepare the necessary applications to delist the group from SGX Mainboard.
- Counter remains suspended.

NEUTRAL NEWS
*ST Engineering
- Injected an additional $3.9m into 90% owned JVCo, ST Aerospace Aircraft Seats, which is responsible for the end-to-end design and manufacturing for a range of aircraft seating solutions.
- MKE has a Buy with TP of $4.15.
- Trades at 19.7x forward P/E and offers an indicative yield of 4.4%.

*Lian Beng
- Acquiring a commercial building at 381 Joo Chiat Road for $27m.
- The deal for the 2,296 sqm gfa property is accretive and will be kept as an investment property for rental income.
- Separately, group completed the disposal of an Australian commercial building in Melbourne for A$90.2m.
- Trades at 7.1x trailing P/E and 0.56x P/B.

*Addvalue Tech
- Collaborating with KSAT to provide enhanced communication services in support of small low-orbiting satellite operations, used for earth observation, scientific, surveillance, weather forecasting and imaging missions.
- KSAT is a leading provider of ground-station-based communication services to low orbiting spacecraft.
- Under the partnership, KSAT will provide Addvalue's Inter-Satellite Data Relay Service as an integrated element to enhance current service offering to its customers.
- Remains loss-making and trades at 3.38x P/B.

Friday, March 9, 2018

MARKET OVERVIEW
- Market may open higher on news that North Korean leader Kim Jong Un has offerred to refrain from further muclear or missile tests and will meet US President Trump in May for denuclearisation talks.
- This comes as investors weigh the economic fallout of Trump's contentious tariffs on foreign steel and aluminium, abeit with some exemptions, against the signing of the TPP trade pact by 11 Asia-Pacific nations, which accounted for 22% of Singapore's merchandise trade for 2017.
- Technically, upside resistance for the STI is at 3,575 with immediate support at 3,420.

CORPORATE RESULTS
*Mandarin Oriental
- FY17 net profit slipped 4% to USD54.9m, impacted by renovation works of Mandarin Oritental Hyde Park, London.
- Revenue rose 2.2% to USD610.8m on improved RevPAR in Asia (+8%), Europe (+4%) and US (+1%).
- Bottom line was hurt by higher effective tax of 21.6% (FY16: 19.5%)
- Its strategic review of The Excelsior, Hong Kong is ongoing, including the option to redevelop the site as a commercial property.
- Final DPS to USD0.015 brought FY17 dividend payout to USD0.03 (FY16: USD0.04).
- Trades at forward P/E of 44.1x and 0.5x P/B.

*Dairy Farm
- FY17 underlying net profit declined 13% to US$403m, due largely to non-recurring business change costs of US$64m. Excluding that, core earnings would have inched up 1%, at low end of expectations.
- Revenue was relatively flat at US$11.3b (+1%) as positive performances in convenience store, health & beauty and furnishings and key associates were offset by poor showing by its supermarkets and hypermarts.
- Gross margin expanded 0.2ppt to 30.4%.
- The US$64m business change costs arose from closure of underperforming stores and stock clearance in its food division, as well as higher tax expense of US$92.9m (+8.4%).
- Maintained final DPS of US$0.145, bringing total dividend to US$0.21 (unch).
- Trades at 20.4x forward P/E.

*Hongkong Land
- FY17 underlying net profit expanded 14% to a record US$970m on increased rents in Hong Kong and lower vacancies in both Hong Kong and Singapore.
- Headline profit soared 67% to US$5.6b on US$4.67b in FV gains on its investment properties.
- Revenue dipped 2% to US$1.96b on lower sales of properties of US$907.8m (-10%) partially mitigated by stronger contributions from its rental income of US$911.7m (+6%) and service income of US$140.3m (+7%).
- Operating margin narrowed 2.4ppt to 46.3% on higher operating costs (+3%).
- Proposing higher final DPS of US$0.14, bringing FY17 dividend payout to US$0.20 (FY16: US$0.19).
- Last traded at 0.4x P/B.

POSITIVE
*City Developments
- Inked a memorandum of general agreement (MOGA) with TID Residential to form a 60:40 JV to undertake a 820-unit EC housing development project worth $509.4m.
- HDB has awarded the 99-year lease land with the area of 27,056.4 sqm and maximum permissible GFA of 81,169.2 sqm located at Sumang Walk to both parties.

*Frasers Hospitality
- Plans to double its Middle East portfolio to 13 properties over the next few years to capitalise on the growing number of business tourists.
- The group has opened Fraser Suites Riyadh in Saudi Arabia and Fraser Suites Muscat in Oman.
- It also plans to open three more properties in Dubai, one in Jeddah and one in Saudi city of Al Khobar and another in Kuwait.

*Citic Envirotech
- Clinched a Rmb300m Public-Private-Partnership project (PPP) in Xiaogan City, Hubei Province in China.
- The project involves the design, construction and operation of a 40,000m3/day wastewater treatment plant and piping works stretching 12.2km.
- The construction of the BOT project will commence immediately and is slated to complete by 2018.
- Project comes with a service concession of 30years with minimum offtake to reach 40,000m3/day in Year 3 from 30,000m3/day in Year 1.

NEUTRAL NEWS
*Asiatravel
- Launching digital theatrical tours with its B2B division TAcentre.com, in partnership with Yaturu.
- Tours are staged using augmented reality technology (AR) and scripted audio-dramas of the history of destinations, along the tour itinerary chronologically.
- The launch will be in May '18, starting with special group packages to Israel.
- Following the launch, the group and Yaturu will jointly develop similar digital theatrical tours in major tourism destinations in Asia, with the first to be ready as early as end 18.
- An extension of the production house (now in Hollywood) will be established in Singapore to fast track development across Asia Pacific.

*Mencast
- Signed an MOU with NUS spin-off company Envirotech and Consultancy under the group's MIC Incubation Programme.
- Envirotech engages in R&D, consultancy, manufacture and design of areas of water and wastewater treatment technologies, as well as environmental modelling and risk assessment.

*8Telecom Int'l
- Acquiring a 51%-stake in China Commodity Market and China Commodity Shopping Centre from Letu Investment and New Pacific Trading for $8m in cash of $6.2m, a loan of $0.4m and 16m shares at $0.09 apiece.
- The companies own two supermarkets in Geylang (4,900 sf) and Chinatown (10,500 sf).

*Chew's Group
- Divesting its Agriculture, Engineering Services, Investment and Marketing arms to Huat Lai for $11m in cash.
- Intends to distribute proceeds from the disposal to shareholders.
- Disposal proceeds together with the group's cash balance of $41.6m would translate to $0.62/share, 11.7% above its last traded price of $0.555.
- It will continue to operate its egg trading business in Chew's HK.

NEGATIVE NEWS
*Noble Group
- Ordered by SGX to appoint an IFA to opine on whether the latter's proposed restructuring and allocation of shares to shareholders, management and senior creditors.
- The IFA opinion is to be included to ensure that stakeholders are fully informed in making their decision during the vote, which require 50% approval to pass the proposed restructuring plan.

Thursday, March 8, 2018

MARKET OVERVIEW
- Investors remain on edge as US President Trump is expected to announce a raft of tariffs on Chinese imports on Thu, which could pose a key risk for Asia, even as the White House ponders on exemptions for some countries.
- Technically, immediate for the STI is at 3,420 with upside resistance at 3,575.

SECTOR WATCH
*Property
- The collective sale fever shows no signs of abating with another four residential properties put up for sale.
- Asia Gardens ($1,675 psf ppr), Park View Mansions ($1,183), 27 Moulmein Rise ($1,525) and Katong Omega Apartments ($1,062) join 12 others on the growing list that is up for tender, worth a total of $5.04b.
- Tenders will close on 16 Apr, 20 Apr, 18 Apr and 5 Apr for the respective sites.
- Ytd, there has been nine en-bloc sales transacted totalling $3.3b vs 27 deals valued at $8.2b for the whole of 2017.

POSITIVE NEWS
*SIA
- Acquiring a 70% stake in a 50:50 JVCo between SATS and DFASS for an undisclosed amount.
- It intends to engage in a travel retail business in Singapore, offering inflight and ground-based duty-free and duty-paid goods as well as mail order and pre-order services.
- Post acquisition, SATS and DFASS will each hold a 15% stake in the JVCo.
- MKE last had a Hold on SIA with TP of $10.95 and Buy on SATS with TP of $6.10.

*CSE Global
- Provided a DPS guidance of $0.0275 for 2018, which gives a dividend yield of 7.4%, during discussions with shareholder Quarz Capital Management.
- Quarz remains supportive of management's commitment to turn around its existing US business and achieve a long-term target ROE of over 10%.

NEGATIVE NEWS
*Creative Technology
- Co-founder and ex-CTO, Ng Kai Wa sold a total 200,000 shares in two transactions at $9.04 apiece, cashing in a total of $1.8m.
- Shares in the tech firm ran up to levels not seen since 2007 after it unveiled its Super X-FI headphone technology.
- Trades at 46.2x trailing P/E.

NEUTRAL NEWS
*Datapulse Tech
- Received a letter from Ascapia informing that it will announce whether or not it would make a partial offer for the company by 9 Mar.
- Media reports had revealed that Ascapia was looking to purchase a 27% stake in the company.

*Tritech
- Entered into an MOU partnership with IDX-listed PT Waskita Karya (Persero) in Jakarta, Indonesia with the aim to identify opportunities for joint efforts for environmental projects in Indonesia.
- Waskita is a construction company specialising in commercial and residential building contracts.

*Geo Energy
- Entered into a US$500m contact with PT Bukit Makmur Mandiri Utama (BUMA) to provide land clearing and overburden removal for its mining area over the entire life of mine.
- The mining area is located at Angsana and Sungai Loban sub-district, Tanah Bumbu Regency, South Kalimantan, Indonesia.
- BUMA is one of the largest mining services in Indonesia and has been providing service to the group's s SDJ mine since Jun '15.

*Grand Banks
- Acquiring Stuart Service Yard in Florida for US$3.2m ($4.2m) in cash to serve as its official US headquarters and consolidate its presence in boat market.
- The property includes seven berths and 12,000 sf of waterfront offices, shops and maintenance facilities.
- It also houses commissioning and repair equipment such as a 50-ton travel lift, an enclosed floating workshop, deep water docks and concrete haul-out area.
- The Stuart Service Yard is strategically located in a hurricane-safe zone in Martin County, Florida, which offers attractive property and labour tax rates.

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All information herein are published for general information. Reader should not rely solely on the information published and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.